Japan is beginning to emerge from 15 years of economic stagnation but a tax rise aimed at controlling sky-high borrowing could spoil the party.
The government is planning to double consumption tax to 10% by 2015. Paid by consumers when they buy goods or services, the tax will be increased in two stages, rising first to 8% in April 2014.
The country’s leaders face a tough choice over how, or even whether, to implement the unpopular measure that could take a bite out of growth just as a bold economic stimulus plan appears to be bearing fruit.
Advocates for the tax increase argue that Japan must do something to improve its fiscal position. Gross public debt is projected to hit 230% of GDP next year, a level critics say is unsustainable.
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